Correlation Between Select Medical and Bumrungrad Hospital

Can any of the company-specific risk be diversified away by investing in both Select Medical and Bumrungrad Hospital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Select Medical and Bumrungrad Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Select Medical Holdings and Bumrungrad Hospital Public, you can compare the effects of market volatilities on Select Medical and Bumrungrad Hospital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Select Medical with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Medical and Bumrungrad Hospital.

Diversification Opportunities for Select Medical and Bumrungrad Hospital

0.44

Correlation Coefficient

Select Medical  Bumrungrad Hospital

Very weak diversification

The 3 months correlation between Select and Bumrungrad is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Select Medical Holdings and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and Select Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Select Medical Holdings are associated (or correlated) with Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital has no effect on the direction of Select Medical i.e., Select Medical and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between Select Medical and Bumrungrad Hospital

Assuming the 90 days horizon Select Medical Holdings is expected to generate 0.86 times more return on investment than Bumrungrad Hospital. However, Select Medical Holdings is 1.16 times less risky than Bumrungrad Hospital. It trades about -0.1 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about -0.1 per unit of risk. If you would invest  1,844  in Select Medical Holdings on December 31, 2024 and sell it today you would lose (294.00) from holding Select Medical Holdings or give up 15.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Select Medical Holdings  vs.  Bumrungrad Hospital Public

Select Medical Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bumrungrad Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bumrungrad Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Select Medical and Bumrungrad Hospital

The main advantage of trading using opposite Select Medical and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Medical position performs unexpectedly, Bumrungrad Hospital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bumrungrad Hospital will offset losses from the drop in Bumrungrad Hospital's long position.

The idea behind Select Medical Holdings and Bumrungrad Hospital Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.